Title Financing Small and Medium Enterprises in Myanmar Author(s ...

Ⅳ. ROLE OF SMES IN MYANMAR’S INDUSTRIAL DEVELOPMENT
The importance of industrialization in a country’s economy does not need much
introduction. Classifying developing countries and developed countries is mainly
based on the extent of industrialization of a country.
The industrial development of a country starts from production and export of
primary products like agricultural products, timber, and marine products. It would then
move on to the production and export of processed, value-added products by using
simple technology. In such case, exports may be garments, furniture, processed sea
foods and vegetables, cans, and household appliances. The next phase would be the
production and exportation of technology-based capital and intermediate goods such as
automobiles, computers and electronic parts, and hi-tech products. The extent of
industrialization of a country can be assessed by the percentage share of the
manufacturing sector in the country’s GDP and the percentage of labor force employed
in the manufacturing sector.
Historically, it was apparent that every Myanmar government tried to promote
industrialization without apparent success since Myanmar gained independence in
1948. The industrialization strategy adopted in Myanmar was based on so-called
state-led industrialization, which mainly focused on import substitution. Accordingly,
governments heavily relied on state-owned industries to implement their strategy. As a
result, private enterprises (majority of those are SMEs) rarely got favorable treatment
from government in terms of subsidies, tax relaxation, development loans, and
assistance in training and technology transfer.
When the SLORC government took over national power in September 1988, it
officially declared the adoption of market-oriented system. The SLORC laid down four
economic objectives that would serve as guidelines in the country’s effort to move
toward the developed-country status. The first economic objective, “Development of
agriculture as the base and all round development of the economy as a whole” clearly
states the government’s emphasis on agricultural sector as the main engine for
economic growth. The fourth objective, “The initiative to shape the economy must be
kept in the hands of the state and national people” explicitly declares the government’s
commitment to maintain national economy within the reach of its control.
At present, the government attempts to achieve industrialization via the public
sector and private sectors. To boost industrialization process through private-sector
investment, The Private Industrial Enterprises Law and The Promotion of Cottage
Industrial Law were enacted on 1990 and 1991, respectively. The Private Industrial